New developments spur upgrades in Vancouver's downtown office market

Owner Cadillac Fairview will be investing approximately $15 million to update Granville Square, located at 200 Granville St. in downtown Vancouver, over the next few years, starting with a full lobby renovation just getting underway, and expected to be completed in early 2013.

Photograph by: Ian Lindsay
, PNG

VANCOUVER — The impact of three new AAA office buildings in downtown Vancouver is already being felt in the market despite the fact they won't be ready for another two years.

According to Colliers International's Q2 2012 Office Report, the addition of Telus Garden, 745 Thurlow and MNP Tower is creating a more competitive environment for office space and pushing landlords to upgrade properties to meet shifting tenant demands and maintain occupancy levels.

"The reality is that these new buildings are most likely going to open fully occupied because of the high demand for LEED certified space and new technology," says Maury Dubuque, Manager of Sales Development, Tenant Advisory Services with Colliers International in Vancouver. "This creates what we call the 'flight to quality.' The existing AAA buildings will have some vacancies, and tenants in A or B class buildings may move to better quality spaces."

Tenant preferences are shifting as well. Significant trends emerging include a strong preference for "green" office space that meets LEED certification or BOMA BESt standards, proximity to transit, and higher demand for amenities such as bike lockers, showers and fitness facilities.

"The average age of the AAA buildings in downtown Vancouver is 24 years old. Lots of things have changed in terms of building technology and how people work. If you own existing older stock, you would want to repurpose, renovate, or make it an attractive alternative," says Dubuque.

Evidence of the shift can be found in lobbies and common areas across the city, including Granville Square (200 Granville St.), located in the central waterfront area downtown. Owner Cadillac Fairview will be investing approximately $15 million to update the building over the next few years, starting with a full lobby renovation just getting underway, and expected to be completed in early 2013.

"The timing for an update is good given that Granville Square will be competing in the marketplace with several new buildings slated to come on line starting late 2014," says Lesley Heieis, general manager of waterfront properties for Cadillac Fairview. "While the building is currently fully occupied, we have to think long term and ensure the property remains modern to continue to attract and retain the best tenants."

The current project includes a new restaurant with outdoor patio (its former tenant was Aqua Riva), new entrances to improve street exposure, updated finishes throughout, and refurbishing the outdoor plaza. Starting in 2013, additional upgrades will include new solar blinds throughout the building, and improvements to the air conditioning system.

"Granville Square is an exclusive and highly demanded building due to its views, proximity to transit, and amenity package, and the lobby renovation completes the offering by positioning it as a top tier "A" offering," says Heieis.

"We welcome the new buildings as they will help accommodate the pent-up demand in the city and maintain the long-term viability of our overall office offering in the downtown, so that the city can continue to attract business from other markets."

The downtown Vancouver vacancy rate decreased to 3.5 per cent this quarter, marking the sixth consecutive quarter that vacancy has remained between 3.5 per cent and 3.8 per cent. With vacancy in this range, the market is technically considered full.

"Landlords have enjoyed a great run in Vancouver with increasing rents and low occupancy in recent years, but that could be coming to an end," cautions Dubuque. "With the new buildings coming on the market in 2014-2015, it's not too late for landlords to make meaningful upgrades. It is time consuming and expensive to attract new tenants, so why not spend the time and money to retain them."

Owner Cadillac Fairview will be investing approximately $15 million to update Granville Square, located at 200 Granville St. in downtown Vancouver, over the next few years, starting with a full lobby renovation just getting underway, and expected to be completed in early 2013.

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